[zhoutong]

Because the IPO prices in China are heavily regulated. Tech companies often raise little money in an IPO because it will always be significantly underpriced (generally 100%-300%).

The authorities will make sure your IPO is oversubscribed by at least 50 times to protect the investors, or they will not approve the IPO.

[huac]

Weird considering the rationale they gave for approving this last batch of IPO's: "a move which could cool a stock market rally that has seen the benchmark blue-chip index surge 13 percent since the start of this year."

http://www.reuters.com/article/2015/04/03/us-china-ipo-idUSK...

[zhoutong]

Not contradictory at all. Because IPO is such a lucrative investment, each round of IPOs can draw as much as several trillion CNY. This amount of money would have to be withdrawn from the stock market to "cool it down".

[huac]

If the profit is guaranteed (which it seems like, with the government restrictions), investment firms should be able to simply borrow the money to buy the newly issued shares.

[zhoutong]

Yes, and it's exactly what's happening. There's no market inefficiency here. During the few days when IPOs are available, the overnight interbank interest rates usually increase significantly compared to other days. On average you can expect to make about 10% p.a. almost-risk-free from IPOs, similar to gearing A-grade corporate bonds.